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GLOBAL BUSINESS MODELS

International Tax Challenges & Opportunities

Nishith Desai Associates


Legal and Tax Counseling Worldwide
5 IFA Conference on International Taxation & Transfer Pricing, Ahemadabad
th

What is a Business
Model?

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Nishith Desai Associates

What
is
a
Business
Model?
WHAT IS A BUSINESS MODEL?
A business model is a conceptual tool that contains
a big set of elements and their relationships and
allows expressing the business logic of a specific
firm. It is a description of the value a company
offers to one or several segments of customers and
of the architecture of the firm and its network of
partners for creating, marketing, and delivering
this value and relationship capital, to generate
profitable and sustainable revenue streams.
Osterwalder, Pigneur and Tucci (2005)

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Types Of Business Models


The subscription business model
The razor and blades business model
(bait and hook)
The pyramid scheme business model
The multi-level marketing business
model
The network effects business model
The monopolistic business model
The cutting out the middleman
model
The auction business model
The online auction business model
The bricks and clicks business model

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The loyalty business models


The Collective business models
The industrialization of services
business model
The servitization of products
business model
The low-cost carrier business model
The online content business model
The freemium business model
The premium business model
The direct sales model
The professional open-source model
Various distribution business models

Nishith Desai Associates

Types Of Business Models

The eComTaxpert Report studied 28


business models relating to the ECommerce industry

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E-COMMERCE BUSINESS MODELS

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E-COMMERCE BUSINESS MODELS

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E-COMMERCE BUSINESS MODELS

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E-COMMERCE BUSINESS MODELS

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E-COMMERCE BUSINESS MODELS

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E-COMMERCE BUSINESS MODELS

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E-COMMERCE BUSINESS MODELS

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E-COMMERCE BUSINESS MODELS

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E-COMMERCE BUSINESS MODELS

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E-COMMERCE BUSINESS MODELS

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E-COMMERCE BUSINESS MODELS

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E-COMMERCE BUSINESS MODELS

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E-COMMERCE BUSINESS MODELS

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E-COMMERCE BUSINESS MODELS

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E-COMMERCE BUSINESS MODELS

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E-COMMERCE BUSINESS MODELS

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E-COMMERCE BUSINESS MODELS

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E-COMMERCE BUSINESS MODELS

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E-COMMERCE BUSINESS MODELS

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E-COMMERCE BUSINESS MODELS

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E-COMMERCE BUSINESS MODELS

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E-COMMERCE BUSINESS MODELS

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E-COMMERCE BUSINESS MODELS

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E-COMMERCE BUSINESS MODELS

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E-COMMERCE BUSINESS MODELS

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E-COMMERCE BUSINESS MODELS

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E-COMMERCE BUSINESS MODELS

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E-COMMERCE BUSINESS MODELS

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Global Business & Tax Issues

Globalization is sourcing from where


a product is cheapest and selling
where it is dearest
But taxation can distort this equation
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International
Tax
Issues
Global Business & Tax Issues

Harmonization of different legal and


tax systems; and
Creating the most tax efficient
structure
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Global business & Tax Issues

Strategy

Tax

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Law

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Global Business & Tax Issues

Private
International
Law

Legal System of
Investor Country

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Public
International
Law

Strategy
Tax

Law

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Legal System of
Intermediate Count

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Strategy Circle

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Investment Structure
Outbound - Equity
Exchange
Controls

Direct investment

Corporate
Laws
Tax

Investment through Holding Company


Host Country

Holding
Company

HoldCo2

India
Company

HoldCo1

Investment through 2-Tier Holding Structure


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Investment Structure
Outbound Instrument
Exchange
Controls

Corporate
Laws

Equity

Tax

Host Country

Debt

India

Hybrid Instruments
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Where & How To Hold Intellectual


Property?
Intellectual
Property
Indian
Pharmaceutical
Company

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Investing in USA
-Whether LLC or Inc.?

US LLC

India

Business

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Investing in USA
-Whether LLC or Inc.?

Local US
Investors

US Inc.

India

US LLC.

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Cross-Border M&A

Can a foreign company merge into


and Indian company?
Does foreign law permit corporate
migration?
What are the implications?
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CHALLENGES AND OPPORTUNITIES


o Domestic Taxation is an Obligation
o Foreign Taxation is a Cost
If not planned right, taxation by
multiple jurisdictions
may magnify this cost manifold
However, if planned right, these
costs can disappear!
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International Tax Challenges


CURRENT CHALLENGES:
The Theory of Nexus & Extra-Territorial
Intervention
Transfer of Intellectual Property
OECD Model Guidelines in light of
advent of Technology

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International Tax controversies


CASES:
Ishikawajima-Harima Heavy Industries Ltd.
Hyundai Heavy Industries Co. Ltd.
Morgan Stanley
SET Satellite
SUB-JUDICE CONTROVERSIES:
Genpact
Vodafone
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International Tax Opportunities


FRACTURING A TRANSACTION
NUMBER OF STRUCTURING POSSIBILITIES:
Holding Companies for Investments & Capital Gains
Jurisdictions to hold IP for License & Royalty
System Arbitrage
Hybrid Instruments
Hybrid Entities
Migration of Companies
Triangular Situations
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International Tax
Challenges & Opportunities

Double (or Multiple) Taxation v. Double Non-Taxation


Tax Avoidance v. Tax Evasion
Tax Havens v. Tax Havens
Tax Treaty Situations v. Non-Treaty Situations
Physical Commerce v. E- Commerce
Pure Breed Instruments v. Hybrid Instruments
Pure Breed Entities v. Hybrid Entities
Mutual Agreement Procedure v. Arbitration
Residents v. Non-Residents
Branch v. Subsidiary
Capital Gains v. Business Income
Transfer of Tangibles v. Transfer of Intangibles
Triangular Situations v. Treaty Shopping
Permanent Establishment v. Permanent Establishment . And the list could
go on.

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Thank You
nishith@nishithdesai.com

Nishith Desai Associates


Legal and Tax Counselling Worldwide
Mumbai
93 B, Mittal Court,
Nariman Point,
Mumbai 400 021,
India
Ph : 91 22 6669 5000
Fax: 91 22 6669 5001

Bangalore
Prestige Loka, G01
7/1 Brunton Road,
Bangalore 560025,
India
Ph : 91 80 6693 5000
Fax: 91 22 6693 5001

Tuesday, August 25, 2015

Silicon Valley
220 California Av.
Suite 201, Palo Alto
CA 94306, USA
Ph : 1 650 325 7100
Fax: 1 650 325 7300

Nishith Desai Associates

Singapore
Level 30,
Six Battery Road,
Singapore 049909
Ph : 65 6550 9855
Fax : 65 6550 9856

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